Beyond Illinois Brick: The Law and Economics of Cost Pass-Through in the ADM Price Fixing Case

Beyond Illinois Brick: The Law and Economics of Cost Pass-Through in the ADM Price Fixing Case This article reviews the legal standards and theeconomics of pass-through to indirect purchasers andillustrates these principles with a case involving ADMin the market for high fructose corn syrup (HFCS).With three assumptions about production technologies,buyers of HFCS experience a 100 percent pass throughof the direct overcharge. The extent of pass throughof the increase by buyers is shown to dependcritically upon the market structure of the purchasingindustry and the shape of the retail demand curve. Flexible demand functional forms are needed to avoidconstraining estimated pass through rates. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Beyond Illinois Brick: The Law and Economics of Cost Pass-Through in the ADM Price Fixing Case

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Publisher
Springer Journals
Copyright
Copyright © 2001 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1026570012375
Publisher site
See Article on Publisher Site

Abstract

This article reviews the legal standards and theeconomics of pass-through to indirect purchasers andillustrates these principles with a case involving ADMin the market for high fructose corn syrup (HFCS).With three assumptions about production technologies,buyers of HFCS experience a 100 percent pass throughof the direct overcharge. The extent of pass throughof the increase by buyers is shown to dependcritically upon the market structure of the purchasingindustry and the shape of the retail demand curve. Flexible demand functional forms are needed to avoidconstraining estimated pass through rates.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 3, 2004

References

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